Telus Corp. is assuring investors it will have no problems funding its dividend growth model and share buyback program even if U.S. telecom giant Verizon Communications Inc. is able to enter Canada under Ottawa's current wireless policy.
Canada's No. 3 carrier is not backing down on its fight to convince the federal government to close so-called loopholes in its wireless rules that incumbents claim would give Verizon "unfair" advantages in the Canadian market.
But CEO Darren Entwistle says he is comfortable with Telus's ability to support its dividend growth model, which targets growth of 10 per cent a year until 2016, and its $2.5-billion share repurchase program – no matter the outcome of that regulatory battle.
"In terms of why, I think we're exceedingly strong when it comes to brand and distribution," Mr. Entwistle told investors Thursday.
Telus, he added, has a "great asset composite" and is enjoying growth in wireless, wireline and health-care divisions.
"I like our competitive positioning because of what we can do on wireless and wireline bundling … and the economic benefits of that are extremely laudable," said Mr. Entwistle, also pointing to the company's balance sheet strength.
On that point, Drew McReynolds, a telecom analyst with RBC Dominion Securities Inc., noted that Telus had a second-quarter ratio of 1.7 times net debt to earnings before interest, taxes, depreciation and amortization.
"Management indicated it would remain aggressive with the [share buyback] (16.5 millions share repurchased from May through July for $536-million) given balance sheet strength and synergistic benefits with the dividend policy and taxation," wrote Mr. McReynolds in a research note to clients on Friday.
Mr. Entwistle, however, also stressed Telus's ability to control costs.
"We have a heritage on the cost-efficiency front," he said. "So what the market takes out of our profit lines, we'll put back through improved – continuous improvements in cost efficiency. So when you put all those together, I think we're in a pretty powerful position."
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